Ain'ts Row —

THQ files for Chapter 11 bankruptcy, will continue to operate

Company says it's "confident in our existing pipeline of games"

Struggling video game publisher THQ announced it has filed for Chapter 11 bankruptcy, but it will continue to operate as it moves forward with an effort to sell its studios and assets.

The publisher of franchises including Saints Row, Red Faction, and Company of Heroes has entered into a "stalking horse bidder" agreement with Clearlake Capital Group. THQ will sell seemingly all its assets and studios, including Austin's Vigil Games, Champaign's Volition, Vancouver's Relic Entertainment, and THQ Montreal Studios.

Despite the announcement, THQ assured stockholders that all its studios remain open, without any planned layoffs. Development on current projects such as Metro: Last Light and Company of Heroes 2 will continue. "The sale and filing are necessary next steps to complete THQ's transformation and position the company for the future, as we remain confident in our existing pipeline of games, the strength of our studios and THQ’s deep bench of talent," Chairman and CEO Brian Farrell said in a statement.

THQ's stock was threatened with delisting from the NASDAQ exchange earlier this year due to poor performance, but it narrowly avoided that fate. The company's stock recently got a small shot in the arm from the success of the Humble THQ Bundle, which offered many of the company's legacy titles for a pay-what-you-want price. Due to the bankruptcy filing, however, THQ will be delisted from the NASDAQ stock exchange within nine business days.

Kyle Orland
Kyle is the Senior Gaming Editor at Ars Technica, specializing in video game hardware and software. He has journalism and computer science degrees from University of Maryland. He is based in the Washington, DC area. Emailkyle.orland@arstechnica.com//Twitter@KyleOrl

51 Reader Comments

I was a HUGE fan of the Dawn of War games. I hope another studio buys up the IP and continues to produce it. I fear that won't happen though, as the only RTS game that seems to sell these days is Starcraft. Also, Games Workshop sucks to deal with when it comes to licensing it's IP, which I'm guessing the new studio would have to do and wouldn't just inherit any licensing privileges THQ already had attached to the Dawn of War games.

This is sad news, indeed. I'm surprised Dawn of War was not mentioned in the article. I would imagine, given the number of expansions and offshoots, that DoW would be one of THQ's more successful franchises.

I don't see any mention of Saints Row 4, either. I'll have to say Saints Row 3 used all of the elements I loved about Grand Theft Auto and actually made it more fun. Planes, helicopters, tanks, alien craft. Professor Genki. Awesome!

Edit: While Saints Row continues to be more tongue-in-cheek, it appears Grand Theft Auto is becoming more serious.

"As part of the sale, the company is seeking approval to assume the contracts of these studios, and Clearlake will assume these contracts."

"Clearlake has agreed to serve as the "stalking horse bidder" for a Section 363 sale process, which allows other interested parties to come forward with competing bids. Aggregate consideration offered by Clearlake for the purchase totals approximately $60 million, including a new $10 million note for the benefit of the company's creditors. The company is asking the Court for a schedule to complete the sale process in about 30 days.

Consumers and retailers should see no changes while the company completes a sale. The new financing will support business operations throughout the period. THQ does not intend to reduce its workforce as a result of the filing, and employees will continue to work their usual schedules and receive normal compensation and benefits, pending customary Court approval."

It was actually reported back in November that they were having a lot of issues. This seemed to be the only logical outcome. Sad though, as they have some fun IPs. I was looking forward to see what they may do with the Saints Row franchise.

Ugh ... although it pains me to say this, but, maybe some game developer who is more competent can pick up and do right by the 40K license.

I followed the Dark Millennium Online news from the first announcement ... and then the cutbacks happened ... and now it looks more and more like vapor-ware. I loved Space Marine (and accepted it for what it was) and though I wasn't a big RTS player, I bought the Dawn of War series to support the continued 40K property development.

Then I realized I haven't played their games. There are a lot of TV show and movie tie in games, which we knew always sucked...

I don't see much innovation in any of the games in their library. prove me wrong, but meh.

Why do you think they died?They tried one innovative product, failed massively with it (uDraw), and most of the rest of their business was mediocre quality movie tie ins.

Surprise surprise, failure.

Luckily the worthwhile studios and franchises are still worthwhile to a third party, so they will be bought out.

What are you talking about? They published pretty much the best RTS of the last 10 years in Company of Heroes. A close second in my book is Supreme Commander, which was excellent. Additionally they published the Dawn of War series, not my favourite, but very well regarded..

They published STALKER Shadow of Chernobyl and its two sequels, which are some of the most atmospheric and enjoyable FPSs I've ever played. The Metro 2033 series that they also publish are a close second.

While I personally don't like Saint's Row at all, it's loved by many and has critical acclaim as an excellent game.

They've put out some of the best games of the last several years, and refrain from pulling the shit that EA and Ubisoft routinely do. If there's anyone who deserved to make it it's THQ.

Furthermore, they own Relic, who are responsible for Homeworld, which has been put forward as the best game ever made. Personally I'd say that title goes to Tie Fighter, but Homeworld is very very good.

Funny how everyone keeps thinking gaming is healthy. In reality the sales show just the opposite. Their is reason Microsoft and Sony are adding streaming content to their consoles. They are feeling the demise of gaming. They are trying to make their consoles relevant. Its not time to say goodbye to gaming. Its not dead, but it is slowing. Got a friend in gaming design. He thinks gaming is moving toward something other then consoles. Its too expensive to develop games on multiple platforms. You will see gaming move more toward a online subscriber system.

Ugh ... although it pains me to say this, but, maybe some game developer who is more competent can pick up and do right by the 40K license.

I followed the Dark Millennium Online news from the first announcement ... and then the cutbacks happened ... and now it looks more and more like vapor-ware. I loved Space Marine (and accepted it for what it was) and though I wasn't a big RTS player, I bought the Dawn of War series to support the continued 40K property development.

Damn you THQ for your mismanagement.

Dark Millenium was actually started by a different developer. Then given to Relic recently.

As for DoW, and Space Marine. They were by far the best representation of 40k in a new media form. This includes the god awful 40k movie. I REALLY hope GW plays it smart and keeps the license with Relic. But knowing them, they'll sell it to the highest bidder, quality be damned.

It could have been so much better. After decades (?) of waiting for a true Total Annihilation successor we got that horribly laggy game where first person to Tech 2 air had the 'I Win' button.I don't think we ever got a 4 person LAN game to run to completion.Though I do still miss it in the "it couldn't be as bad as I remember" sense.

No surprises there. You can only crap out mediocre games for so long and hope to stay afloat. I'll never forgive them for what they did to the Total Annihilation/Supreme Commander franchise. Supreme Commander 2 was a trainwreck of epic proportions.

Also, Volition made awesome games before they were bought out by THQ. The Freespace games are some of the greatest games of all time on any platform. Freespace 2 rivals Half-Life and Deus Ex for greatest PC game ever made. THQ has been sitting on a goldmine with Volition for the past decade, and they've just had them pumping out godawful Red Faction sequels.

It could have been so much better. After decades (?) of waiting for a true Total Annihilation successor we got that horribly laggy game where first person to Tech 2 air had the 'I Win' button.I don't think we ever got a 4 person LAN game to run to completion.Though I do still miss it in the "it couldn't be as bad as I remember" sense.

I should mention that when I say Supreme Commander I mean FA. Yes, it could have been better, but it was still very good. It's not a true TA successor, but I don't think that's all that bad because I still have TA. It was inspired by TA, and I think it worked out really well.

Funny how everyone keeps thinking gaming is healthy. In reality the sales show just the opposite. Their is reason Microsoft and Sony are adding streaming content to their consoles. They are feeling the demise of gaming. They are trying to make their consoles relevant. Its not time to say goodbye to gaming. Its not dead, but it is slowing. Got a friend in gaming design. He thinks gaming is moving toward something other then consoles. Its too expensive to develop games on multiple platforms. You will see gaming move more toward a online subscriber system.

Funny how gaming IS healthy. Companies go out of business all the time.

Game retailers are probably in trouble, though, because (guess what) their audience is tech savvy and can order stuff too easily from Amazon, Steam, and similar online sources. And its more convenient.

A lot of companies probably are having trouble too for exactly the same reason - today, you're competing with a lot more games than you were in the past. Every year we add that many more good games, and there's nothing preventing you from getting a good game of yesteryear for $5-10 on Steam. The graphics have become increasingly tolerable in 3D environments, and 2D has been making something of a comeback.

So what is to stop people from looking back with their gaming dollars? Very little.

Indeed, I've cut back my purchasing a great deal of late precisely because I already have too many good games I've never beaten, or even played in many cases. So yeah, I'm interested in all these new games... but I won't be buying them for another year or two.

No surprises there. You can only crap out mediocre games for so long and hope to stay afloat. I'll never forgive them for what they did to the Total Annihilation/Supreme Commander franchise. Supreme Commander 2 was a trainwreck of epic proportions.

Also, Volition made awesome games before they were bought out by THQ. The Freespace games are some of the greatest games of all time on any platform. Freespace 2 rivals Half-Life and Deus Ex for greatest PC game ever made. THQ has been sitting on a goldmine with Volition for the past decade, and they've just had them pumping out godawful Red Faction sequels.

While I agree with you on Volition, Supreme Commander 2 was the produce of Gas Powered Games (Developer) and Square (Publisher) - there was no THQ involvement at all for that title.

As for Supreme Commander 2 itself - that is year on year for the 4th year running now, a LAN party favorite over here. After the economy was fixed in a patch, the game has been stunningly wonderful in multiplayer. The only real weakness in the game is a too-small selection of maps. The Single Player blew chunks though.

So the Humble THQ Bundle didn't bring in much cash? Wonder if it hurt more than it helped.

How could it have hurt? I'm guessing the reason why most people bought it was because there were so many games at a low price, which they would not have bought otherwise.

I don't know that much about business and sales, but if you expect to sell 1 million units at a cost of $40, to break even on your $40 million development budget, that's your break even point. If you haven't hit that number yet, and were half way there (500,000 customers at $40), and now sell a bunch at a huge humble bundle discount ($5), some of those original 1 million target customers that you hoped to reach now have the product at a steep discount. So your pool of potential customers just got smaller, you got a little bit of money for it, but it didn't get you too much closer to covering the original $40 million development costs. Plus, after seeing a huge discount, who is going to pay $40 for now.

I'm a shareholder in THQ so I'm more than a little bit pissed about this. THQ's recent financial troubles have been almost entirely a result of mismanagement under the current CEO, who saw the company decline from $40 per share to (adjusting for the stock buyback) $.04 cents per share over the past five years. Why the board didn't can him years ago is beyond me.

THQ has lots of good IP and potential to be a profitable company, they just keep making stupid decisions with their money.

I thought the THQ Humble Bundle was going to give them the injection of cash they needed to keep rolling and get a boost from the holiday season and the A-list titles they have coming in the new year, but I guess not.

I'm a shareholder in THQ so I'm more than a little bit pissed about this. THQ's recent financial troubles have been almost entirely a result of mismanagement under the current CEO, who saw the company decline from $40 per share to (adjusting for the stock buyback) $.04 cents per share over the past five years. Why the board didn't can him years ago is beyond me.

THQ has lots of good IP and potential to be a profitable company, they just keep making stupid decisions with their money.

I thought the THQ Humble Bundle was going to give them the injection of cash they needed to keep rolling and get a boost from the holiday season and the A-list titles they have coming in the new year, but I guess not.

If you're really an investor in THQ this should be good news for you. An equity firm is --investing-- in THQ, giving them money to stay stable for development of not just their next three titles, but the ones after. This means revenue coming in which will boost the value of your stocks going forward.

Chapter 11 also protects your investment in the company, and can help THQ clear some bad debts (at least renegotiate them). This has the potential to put THQ in a very strong position going forward.

If your investment is the games you bought, and you are a fan, this is equally good news. The company will remain in business and putting out the games you already love (except Homefront because ew).

There really isn't much to be worried about here. It is overall an excellent development, an without it THQ would be looking at insolvency very soon.